Across The BorderChina’s express delivery companies race for IPOs
Rush for listings in highly competitive sector unlikely to benefit anyone
Leading players in mainland China’s express delivery market, the world’s largest, are racing to be the first to tap the capital market – including those that previously showed little interest in going public when the industry landscape was much less contested and much more lucrative.
Following a statement from SF Holdings last week confirming it was planning to list in the A-share market, SF Express – which aspires to become China’s Fedex/UPS – is finally hitting the market, with some valuing the company at 100 billion yuan (HK$118.8 billion).
According to mainland media reports, SF’s low-profile founder and chairman, Wang Wei, declared his disinterest in a public flotation a few years ago.
“The plus of going public is just money – getting the funding needed for the growth of the company,” he was quoted as saying. “SF needs money too, but SF shall not list for money. Once listed, the company becomes a money-making machine, every fluctuation of its share price rattles the nerves of the company. That is not good for running a company.”
The timing is bad. But wait any longer and you’d be in bigger trouble
It appears Wang, a mysterious entrepreneur famous for turning away journalists and investors alike, can no longer afford to turn investment away given SF’s ambitious growth plan, which includes building a cargo airport of its own in Hubei on top of a fledgling freighter fleet.
Mainland express companies are falling victim to their own success, as their exponential growth along with the e-commerce industry had outpaced their income growth. The fear of lagging behind – from both the companies and their backers – is driving a rush for initial public offerings that will probably do little good for anyone in the race.